As part of our continuing series on the most recent report to Congress, the National Taxpayer Advocate (NTA) is stating that funding to the IRS is inadequate. The report identifies this lack of adequate IRS funding as a major problem for taxpayers. Each year, more than 100 million taxpayers call the IRS for help and millions more visit IRS walk-in sites or send correspondence. Current metrics prove the agency is increasingly unable to keep up with taxpayers’ demand for help in complying with their tax obligations.
“The requirement to pay taxes is generally the most significant burden a government imposes on its citizens,” the report says. “The NTA believes the government has both a practical and moral obligation to make compliance as simple and painless as possible.” The report also points out that federal spending cuts, which are designed to reduce the budget deficit, have the effect of increasing the deficit when applied to the IRS.
Impact on Taxpayer Service . The report claims the IRS’s workload has increased significantly over the past decade, and since 2010, IRS funding and staffing have been cut by 8 percent. The report also highlights several key areas in which taxpayers feel the quality of service has dropped to unacceptable levels:
- Last year, the IRS could only answer 61% of calls from taxpayers seeking to speak with a customer service representative (CSR). That’s down from 87% ten years earlier, with half the decline occurring since 2010. In 2013, 39% of calls (20 million calls) simply did not get through.
- Taxpayers who did get through had to wait on hold approximately 17.6 minutes before speaking with a CSR. That’s nearly a six-fold increase, with almost half that increase occurring since 2010.
- Millions of taxpayers visit IRS walk-in sites each year for assistance. Ten years ago, the IRS answered some 795,000 tax law questions at these sites during the filing season. Last year, it handled about 110,000 tax law questions during the filing season – a reduction of 86%.
- The IRS historically has prepared tax returns for taxpayers seeking its help, particularly for low income, elderly, and disabled taxpayers. Ten years ago, it prepared some 476,000 returns. That number declined significantly over the decade, and the IRS recently announced it will no longer prepare returns at all.
- Last year, the IRS received about 8.4 million letters from taxpayers responding to proposed adjustments to their tax liabilities. As of the end of the fiscal year, 53% of taxpayer letters in the IRS’s “adjustments” inventory were considered “over age” (generally, more than 45 days old). Compare that to an “over age” of 12% ten years earlier, and 28% in 2010.
- The IRS recently announced it will only answer “basic” tax law questions on its telephone lines and in its walk-in sites during the upcoming filing season and it will not answer any tax law questions after the filing season, including questions from the millions of taxpayers who obtain filing extensions and prepare their returns later in the year.
The NTA made it clear that the deficiencies in taxpayer service are attributable primarily to a lack of resources. Regardless of cause, “it is a sad state of affairs when the government writes tax laws as complex as ours – and then is unable to answer any questions beyond ‘basic’ ones from baffled citizens who are doing their best to comply.” The NTA expressed particular concern about the magnitude and impact of cuts to the IRS’s training budget. Since 2010, the IRS’s training budget has been cut from $172 million to $22 million. “If IRS customer service representatives are not well trained, taxpayers calling for help are more likely to receive incorrect information or no information,” the report says. This will have an impact on voluntary compliance and revenue collected. The report reiterates the Advocate’s longstanding recommendation that the relevant congressional committees work together to develop new procedures to fund the IRS, with the goal of maximizing tax compliance, particularly voluntary compliance, with due regard for protecting taxpayer rights and minimizing taxpayer burden.